Chinese exporters hunt for alternatives to ‘irreplaceable’ US buyers

Hundreds of attendees listened intently as employees of Russian e-commerce companies explained what Russian consumers like to buy online. Night lights, scented candle sets and educational toys are among the popular goods on one platform—and the cheaper, the better, a presenter said. Audience members snapped photos of the presentation and scanned QR codes to join chat groups to exchange more information.

It was a striking scene for a Chinese export industry that for decades focused mainly on the U.S., the world’s largest consumer market. But pressure from Washington, with escalating tariffs, has forced many Chinese factory owners to confront an existential question: If they can’t sell profitably to the U.S., then where?

Presenters at the Global Cross-Border E-commerce Selection Exhibition, a biannual event in China’s manufacturing hub of Shenzhen, offered many answers. But none of them were entirely reassuring for exporters who built their businesses on American consumers. The anxiety was palpable.

“The U.S. market basically is irreplaceable," said Mike Wang, 37, a sales manager at the booth of Union Tree, a Christmas tree maker based in China’s eastern export hub of Yiwu.

Mike Wang says moving production of his company’s Christmas trees out of China would be too costly.

The event, which featured some 800 manufacturers, is designed to connect Chinese factories eager to sell abroad with buyers, traders and representatives from e-commerce platforms. Booths this year featured everything from power tools to kitchenware to binoculars, as well as cosmetics, jewelry and plastic tablecloths.

Some manufacturers said they are hoping other markets, including Southeast Asia and South America, can help offset the U.S. Others are considering moving factories to places such as Cambodia or Vietnam, which they hope will enable them to get around U.S. tariffs on Chinese goods. Still others are trying to figure out ways to sell directly to consumers, cutting out middlemen and costs. With a little more hustle, perhaps profits can be preserved.

The risk is that none of those options might be enough if President Trump keeps pushing tariffs higher in a bid to force American companies to source more at home. So far, his tariffs have added 20% to the cost of Chinese goods. While importers are responsible for paying tariffs, many U.S. retailers are pressuring their Chinese suppliers to lower prices to help offset the added cost. That could kill off some Chinese factories, which often run on wafer-thin profit margins.

The U.S. president is also expected to unveil a slate of so-called reciprocal tariffs on April 2 that could target countries where Chinese factory owners are thinking of establishing operations to avoid duties, making it hard to figure out where to go.

When it comes to selling abroad, no other single market compares to the U.S. Although Chinese exports to Russia have soared since the invasion of Ukraine, rising 47% in 2023 from a year earlier and 4% last year, growth opportunities are limited. Russia’s population of around 146 million is less than half that of the U.S.; its per capita income is much lower; and its economy is beset with inflation and other strains.

Already, Russia is starting to push back against a flood of cheap Chinese imports. It has introduced tariffs on some Chinese goods and raised recycling fees on imported cars, effectively raising the price of vehicles from China.

An accessories saleswoman at the Chinese exporters’ exhibition in Shenzhen.

The Southeast Asian market, meanwhile, is fragmented, with many countries and different languages, cultures and regulations for each. Selling more in China isn’t a great option, either: Although the market is huge, it is extremely competitive, and a weak economy has meant that consumption growth is slow.

Union Tree, the Christmas tree maker, earns about half its revenue from North America, mainly the U.S. What it has to sell is easy to visualize in American homes and offices, including traditional dark-green trees with shining stars on top, red trees with colorful lightbulbs and light-green trees that tilt noticeably at the tip. (Wang, Union Tree’s sales manager, explained the tilted tip by saying, “it’s amusing this way.")

Tariffs haven’t had much impact so far, Wang said, because big clients already placed orders before the tariffs hit.

But pain is inevitable if the tariffs aren’t removed. Union Tree’s profit margins are only about 5% to 10%, Wang said—too thin to absorb the levies Trump has imposed.

The company, which has about 150 employees, hasn’t figured out a clear way forward. Wang reckons that setting up shop elsewhere, such as Southeast Asia, would be too costly, given that most parts would still have to be imported from China, even if other expenses are relatively low. Maybe Union Tree could see if its clients would sell more to other countries, since it already has customers in Europe and Brazil, he said.

Steps away from the Union Tree booth was another firm whose future is unclear: Shenzhen YYBLED Technology, a maker of LED lights whose booth was decorated with LED designs, including one shaped like a rose with rainbow colors.

Salesman Yin Xu said that some in his industry have diversified production beyond China. YYBLED, which relies on the U.S. for about a third or more of its revenue, was also asked by a client to expand into Cambodia. But given the relatively small size of the company—it has about 70 people at its factory in the nearby manufacturing hub of Dongguan—and because it isn’t familiar with Cambodia, it decided not to expand, Yin said.

Shenzhen is a major manufacturing hub and one of China’s largest ports.

“A lot of big Chinese factories have already gone there, and that’s also made competition severe there too," he said.

Indeed, getting enough workers in a place such as Cambodia seems unlikely at this stage. The country’s population of around 17 million isn’t even as big as that of the city of Shenzhen, which has 18 million people.

Not everyone at the event was worried. Owen Hu of Taizhou Zenghui Auto, a producer and seller of mobility vehicles catering to older people, said he is confident the company can raise the price of its vehicles in the U.S. to overcome tariffs. That is because there is a limited number of rival producers. Also, such vehicles are often covered by U.S. health insurance, Hu said.

He said he expects to hike the price of one model that now sells for around $2,300 to around $2,500, though he conceded there is some risk that consumers could try to shift to cheaper models.

For some other people at the event, tightening access to the U.S. market is like the end of a romance—a relationship that helped make many in China richer, but now may be irreparable.

At the booth for Huizhou Cyberich Industrial, another Christmas-decorations maker, salesman Yang Jianjun said some 90% of the company’s sales come from the U.S., including stores like Walmart and Target. He is becoming more jaded about the U.S., though.

“At the beginning, we thought it was just a tariff issue between the U.S. and China. But now I see that the nature of it has changed, and it is about suppressing China," Yang said.

In a booth filled with boxes of Christmas ornaments—shiny ones, matte ones and glittery ones paired with candy cane-shaped ones—Yang said the company is considering suggestions from clients to expand production into Cambodia. He said he understands that costs have been rising in Southeast Asia, and that there could be labor strikes in some places.

Yang is also studying whether the company could open its own store on e-commerce platforms, removing any middlemen and improving its profit margins. He planned to attend some presentation sessions focused on the idea at the event, he said.

Chinese factory owners are stubborn, he said, and will try anything to keep their operations open. “It’s impossible to let them die."

Zhao Yueling contributed to this article.